Retail’s ability to disrupt and update its strategies alongside a broader call for more sustainable practices were among the key topics at this year’s World Retail Congress in Amsterdam.
“High velocity retail” and “the future of retail” were the themes for the conference in 2019, with technological advancementstanding out as a priority for retailers. “If you’re slow at picking up these nuances, these trends and things that are happening all around us all the time, you’re going to be a loser,” said Lord Stuart Rose, former chairman of British department store Marks and Spencer, now chair of online grocer Ocado.
There was also a conversation around slowing down, however, which tied into consumer expectations of purpose-driven brands. “I think the brands and retailers who will win will be the ones who can tap into meaning,” said philosopher Robert Rowland Smith.
Here’s everything else you need to know…
TOP STORIES
High velocity retail: Why the World Retail Congress 2019 was a breath of fresh air [Forbes]
Slower retail: Has the industry hit its speed limit? [FashionUnited]
Lord Rose: Death of the high street is “overblown” [Retail Gazette]
Amazon revealed as the world’s most valuable retail brand, but it shouldn’t rest on its laurels [Warc]
INNOVATION
Levi’s to allow shoppers to customize their own ‘greener’ jeans [FashionUnited]
Retail chiefs dismiss AI job threat, promise more training [Reuters]
Google launches tool to help retailers boost customer experience [Retail Week]
Walmart International CEO on data privacy, the failed Asda merger and leveling the playing field for women [FashionUnited]
RETAIL UPDATES
Zalando to expand delivery from stores to bag missed sales [Reuters]
Sephora uses stores to build customer relationships [Essential Retail]
Yoox Net-a-Porter to become one of the first to launch shoppable Instagram account [ChargedRetail]
JD.com exec Ling on the future of ‘boundless retail’ [Retail Week]
Tory Burch and Made.com on the future of brands [Retail Gazette]
BUSINESS MODELS
Retailers should collaborate to survive: “You can’t do it alone” [CyclingIndustry]
Retailers say business model needs to change for them to remain relevant [Enterprise Times]
Millennials are driving growth in emerging subscription retail services [FootwearNews]
Superdry chairman urges boardrooms to hire young people amid online shift [Retail Gazette]
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How are you thinking about innovation? We’re all about finding you the perfect partners to do so. Current Global is a consultancy transforming how fashion, beauty and consumer retail brands intersect with technology. We deliver innovative integrations and experiences, powered by a network of top technologies and startups. Get in touch to learn more.
Target is the latest retailer to take on Victoria’s Secret [Quartz]
BUSINESS
Swarovski, CFDA part ways for Fashion Awards [WWD]
LVMH plans London hotel and new flagship in experiential push [BoF]
Anya Hindmarch to split with partner Mayhoola for investments [WWD]
Burberry launches staff training plan after ‘noose’ hoodie row [The Guardian]
L Brands to shutter 53 Victoria’s Secret stores [Retail Dive]
Puma signs mega global deal with Manchester City owner, its biggest deal ever [Fashion Network]
Macy’s new restructuring to cut 100 senior positions, save $100 million annually [Fashion Network]
CULTURE
Sesame Street’s turning 50, and InStyle dressed our favorite characters for the party [InStyle]
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How are you thinking about innovation? We’re all about finding you the perfect partners to do so. The Current Global is a consultancy transforming how fashion, beauty and consumer retail brands intersect with technology. We deliver innovative integrations and experiences, powered by a network of top technologies and startups. Get in touch to learn more.
A round-up of everything you might have missed in relevant fashion, retail and tech industry news over the past week, including Virgil Abloh launching for Louis Vuitton.
TOP STORIES
Over the rainbow: Virgil Abloh makes historic Louis Vuitton debut [BrandChannel]
Instagram celebrates its 1 billion user mark with launch of YouTube rival IGTV [TheDrum]
“Sooner or later, our entire industry will be operated by AI and robots, not humans,” said JD.com’s CEO, Richard Liu, at the World Retail Conference in Madrid this week.
Speaking to a large audience of retail professionals, the head of China’s second-largest e-commerce company (behind the Alibaba Group), highlighted the fact he believes the future of retail is all about automation.
The Asia region is known to heavily invest in technologies that enable more personalized, seamless, and often self-directed retail experiences, as we recently highlighted on the site, making this a more natural leap for such businesses, but Liu’s views were not met by everyone worldwide.
Mango chairman Daniel Lopez disagreed on the idea of automation as inevitable, saying that humans are sociable at the core, so stores should strive to provide that element. “This is part of the experience that consumers are looking for, and by all means we shouldn’t lose that human touch,” he said. Mango has always had ‘experience’ as a central part of its DNA as a result, he explained.
In another conversation, John Lewis’ group development director, Tom Athron, delivered a warning on the same note: “Walk away from the power of the human at your peril. To assume consumers want everything to be automated or screen-based is naive, they want that in some ways, but I have a belief that humans and machines together will always be better than humans on their own, or machines on their own.”
Athron agreed, however, that some automation is necessary when labor is a retailer’s biggest cost. As the industry and technology evolves, it’s inevitable computers will be able to perform certain jobs more efficiently, he explained, making it essential to shift accordingly to an extent in order to remain competitive.
Véronique Laury, CEO of Kingfisher, which owns companies such as UK DIY retailer B&Q, says that the only benefit a physical store will have in the future is to provide emotion-led experiences, which are more often than not facilitated by humans. “That emotional connection is not completely fulfilled through digital techniques or technology. The human being side of talking to someone who understands what you are going through will be really important even in the future,” she said as she likewise dismissed the idea of purely automated or robotic-led stores.
Beyond experience, convenience and frictionless shopping was also a central theme of the conversation at the event. JD.com’s Liu also spoke about how the company is always finding opportunities to invest in logistics capabilities to serve the Chinese consumer’s evolving expectations around speed, for instance.
JD.com’s delivery service currently covers 100% of China and offers next day delivery to 90% of its 252 million customers. Liu’s goal for the next few years is to have a convenience store in every Chinese village, and the retailer is currently deploying drone technology to source and supply more remote locations until it reaches that milestone.
Alibaba and JD.com have long competed with each other to become the dominant e-commerce force in China. Lately, their battle has escalated in the luxury arena.
Over the past few months, each has welcomed a wave of new luxury brands that have launched or are about to launch on their respective platforms. For example, Kering-owned Saint Laurent and Swiss jewelry and watch label Chopard chose JD.com, while most labels under the conglomerate LVMH (such as watchmaker Tag Heuer, beauty brands Fresh and Guerlain, and most recently the Spanish luxury brand Loewe) have chosen to work with Alibaba’s business to consumer (B2C) site Tmall.
“We see both JD.com and Tmall really ramping up their efforts to create a more high-end experience for luxury brands,” said Liz Flora, editor of Asia-Pacific research at the digital intelligence firm L2.
It is, indeed, good timing for both platforms to step up their expansion into the luxury sector, according to Jacqueline Wong, executive director of the luxury marketing agency Activation Group since the e-commerce giants can offer something that the gray market cannot.
“Chinese consumers have been accustomed to online shopping,” Wong said, “When it comes to purchasing luxury goods online, they are now looking for platforms that can give them more confidence (in contrast to other traditional gray channels such as daigou and local unofficial distributors).”
Also, Wong believes that because the two e-commerce giants have operated in China for years, they’ve been able to collect enough customer data that can be utilised to better serve luxury brands.
However, while the customer need for luxury e-commerce platforms is there for the taking, it shouldn’t be taken for granted and Alibaba and JD.com still have to put up a fight to meet their expectations.
How have their differing models affected the way that luxury brands engage with the platforms?
Alibaba’s Tmall and JD.com offer differing levels of partnership deals to international brands. Alibaba allows brands to launch official flagship stores on the site from which they can self-run their businesses, and sometimes provides them with necessary marketing, data analytics, and logistical assistance.
While JD.com also has flagship stores, it is thought of more like Amazon, a marketplace for a wide variety of products sourced from brands that then get distributed from JD’s own warehouse.
The different models have affected the way that luxury brands engage with the platforms. Currently, in terms of the pace of luxury brand acquisition, Alibaba’s Tmall is leading. According to a recent report by L2, as of 2017, 24% of its index luxury brands own a flagship store on Tmall, while only 10% of that group have one on JD.com.
But JD is quietly catching up. While its share of the market is less than that of Alibaba’s, overall, its warehouse operates 65% of L2’s index luxury brands as of 2017, a figure that is much higher than the number of flagship stores it has. However, without a flagship store, the platform cannot guarantee it has a direct relationship with the brand, necessarily, as luxury goods can also be sold by independent distributors.
The Farfetch partnership is also set to give JD.com a bigger advantage as it has strong relationships with luxury brands: 83% of L2’s index luxury brands are on Farfetch’s China site.
Alibaba’s strength is reflected in its close relationships with two major luxury powerhouses LVMH and Kering, which both own a load of elite luxury labels that are looking to expand further in the Chinese market.
What are some common challenges they are facing?
1. Fashion and Luxury DNA
“It is not the case that you list luxury items on your site, then consumers will just come to buy them,” said Wong from Activation Group when commenting on challenges faced by these two platforms to further tap into the luxury sector.
“These e-commerce platforms need to adjust their branding to show their fashion and luxury DNA. That’s how to uplift Chinese consumers’ expectations and confidence in purchasing luxury items on their sites.”
Unlike international luxury e-tailers such as Yoox Net-a-Porter and Farfetch, which have had luxury in their DNA from the get-go and long been endorsed by brands, Alibaba and JD.com both started with a grassroots profile. Therefore, whether they are able to transform their image through these luxury platforms in the eye of the market remains a pivotal question.
2. Counterfeits
The issue of counterfeits is an old one, but it has been a constant thorn for international luxury brands looking to develop a closer relationship with Chinese domestic e-commerce platforms. It is a topic that cannot be avoided, particularly by Alibaba whose Taobao Marketplace has been flooded with fake goods.
Since late last year, however, Alibaba has made a flurry of public efforts in dealing with the issue from setting up the Anti-counterfeiting Alliance to launching an IP protection platform for brands.
“They are making a lot more progress now than they were last year,” L2’s Flora said and added that these ramped-up efforts are really paying off for them as this year, they have attracted several new brands such as Tag Heuer, Furla and Polo Ralph Lauren.
JD.com, on the other hand, has received less criticism on this front. “JD.com is a bit more advantageous at convincing brands that it could fight fakes,” Flora noted, “because it distributes products from its own warehouses. So it shows that they are able to be more on top of counterfeits than Alibaba.”
3. Customer experience
Another aspect that both platforms need to work on is creating the luxury customer experience online to satisfy buyers looking for exclusivity and premium services like the ones they receive at traditional brick-and-mortar luxury retailers.
Alibaba has relied on the “New Retail” initiative they are experimenting with to deliver a seamless shopping experience for consumers. This new data-driven business model will integrate online stores, physical stores and logistics, which has the potential to create high-end luxury experiences for consumers.
JD.com focuses more on the logistics side. It just unveiled the “white glove” express delivery service for luxury buyers. In some metropolitan cities, consumers can receive their orders within 24 hours and their packages are brought to them by well-dressed deliverymen in luxury cars.